9911796707
TMI Blog1995 (2) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 4,76,543. The Income-tax Officer disallowed such deduction in respect of the expenditure of Rs. 2,37,313. Before the Commissioner of Income-tax (Appeals), the assessee claimed weighted deduction in respect of various items, i.e., (1) legal expenses incurred in connection with export of flate to Pakistan ; (2) Stationery used relating to exports; (3) telex and telephone charges relating to exports; (4) cable expenses incurred other than tenders; (5) salary, allowances, bonus, etc., relating to five employees, and urged that these expenses qualified for allowance under section 35B(1)(b)(iii) of the Income-tax Act, 1961, or alternatively under section 35B(1)(b)(v) or under any other sub-clause of the said section which was considered appropriate. The Commissioner of Income-tax (Appeals) declined to consider any alternative claim and upheld the Income-tax Officer's assessment. The assessee also claimed weighted deduction in respect of salary and other Allowances paid to employees stated to have been engaged in obtaining information, preparation and submission of offers against tenders for export, etc. The Commissioner of Income-tax (Appeals) held in favour of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i). In fact, a part of the salary paid to the first three out of these five persons has been allowed in the assessee's appeal by the Commissioner of Income-tax (Appeals) included in the sum of Rs. 1,45,405. The assessee's claim for deduction in respect of the balance of the salary payment to the same persons under sub-clause (v), is obviously incorrect as it is not for ' preparation and submission of tenders ' referred to in sub-clause (v). We are, therefore, of the view that the assessee's alternate claim in respect of the entire expenditure of Rs. 1,23,449 cannot also be allowed under sub-clause (v) as the expenditure in question has not been established to have been incurred for the preparation and submission of tenders." In the case of CIT v. Southern Sea Foods Ltd. [1995] 215 ITR 176 (Mad), a Bench of this court has observed as follows (at page 182) : " The Income-tax Act is the law under which tax is levied, assessed and collected for any assessment year at any given rate or rates in respect of the total income of the previous year or previous years as the case may be, on every person. ' Person ' is defined as an individual, a Hindu undivided family, a company, a firm, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other functions, which being in India, get their effect outside India except distribution, supply or provision outside India of such goods, services or facilities, which is found in section 35B(1)(b)(iii) and which is qualified by the words ' not being expenditure incurred in India in connection with or expenditure incurred on carriage of such goods to destinations outside India or on the insurance of such goods while in transit.' These qualifying words in respect of expenditure on distribution, supply or provision outside India of goods, services or facilities, are not available in the other clauses of sub-section (1)(b) of section 35B, and thus it is irresistible that while assessing any claim to expenditure on advertisement or publicity can be allowed to be deducted it is necessary to find that such expenses are closely connected with the activities of the assessee outside India. " These observations are expressions of the time-tested wisdom which is found in an earlier judgment of this court in the case of CIT v. Southern Sea Foods (P.) Ltd. [1983] 140 ITR 855, in these words (at page 859) : " We may, however, add that the reason given by the Income-tax Officer in disallowi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n cannot, in any event, be accepted as a correct interpretation of the provision. As earlier mentioned, sub-clause (iii) of section 35B(1)(b) expressly excludes ' expenditure not being expenditure incurred in India in connection therewith '. To maintain that weighted deduction is available even where expenditure is incurred inside India would go against the teeth of this specific exclusionary provision. A look at the other sub-clauses of section 35B(1)(b), such, for instance, as subclauses (i), (iv), (vi), (vii), (viii) and (ix), also shows the insistence of Parliament that the weighted deduction cannot be exigible unless the expenditure under the different heads is incurred 'outside India', a phrase which occurs again and again in the various sub-clauses. " We do not read in the last observation that the pronouncement " for expenses " quoted in this judgment ever intended to say that in no case any expense within India for the purpose as envisaged under section 35B(1)(a) which qualifies under one or other clause of section 35(1)(b), can qualify at all. The qualifying words have been noticed by this court in CIT v. Southern Sea Foods Ltd. [1995] 215 ITR 176 as not available in ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cope of the said clause, the High Court observed (at page 428) : 'As earlier mentioned, sub-clause (iii) of section 35B(1)(b) expressly excludes "expenditure not being expenditure incurred in India in connection therewith". To maintain that weighted deduction is available even where expenditure is incurred inside India would go against the teeth of this specific exclusionary provision. A look at the other sub-clauses of section 35B(1)(b), such for instance as sub-clauses (i), (iv), (vi), (vii), (viii) and (ix) also shows the insistence of Parliament that the weighted deduction cannot be exigible unless the expenditure under the different heads are incurred " outside India ", a phrase which occurs again and again in the various sub-clauses. To accept learned counsel's argument that the Indian situs of the export expenditure is no disqualification for eligibility for weighted deduction would be to bring in, under one broad indiscriminate sweep, all expenses in an exporter's business. If that were the position, Parliament need not have troubled to enact so many clauses in section 35B. The section would have been simpler and been enacted differently.' While comparing sub-clause (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
